Fair Taxes

The recent proposals from the federal government to reduce certain tax advantages available to small business has met strident resistance from those who may have to pay more tax, and from others who just want to slag the Minister. The Minister has argued that the special provisions give too many benefits to the very wealthy. Unfortunately, the goal of making a fairer tax system gets lost in the fracas. However, good thinkers on the left and right see the merits of these proposals. Unfortunately, our credit union advocates have been silent.

Last week the Canadian Centre for Policy Alternatives released a paper that critically assessed one of the three ‘tax loopholes’ that Minister Morneau wants to change. The ‘income sprinkling’ provision allows a small business to reduce potential income tax by having the company ‘pay’ some earnings out to the owner’s immediate family. The CCPA looked at tax data and confirmed that only 1 in seven companies use this option and it is predominantly the highest income households; as the Minister had claimed.

Today, Andrew Coyne writes in the National Post quoting from a book, “How We Can Win”, by Anthony Lacavera where the data confirms that few small businesses are real job creators, and hence these tax benefits are not job creators. This is the myth many tax reform opponents want us to believe. Further, Coyne quotes Lacavera that Canada also has “one of the richest sets of subsidies in the OECD” for entrepreneurs, a “tantalizing smorgasbord of federal and provincial grants (and) loans.”

Indeed, in another column Coyne argues that the real failing of the Liberal changes is that they did not go far enough.

The big question revolves around tax fairness. Yes some may feel aggrieved if their ‘loophole’ is closed. But it is not because they are bad people, or they have done anything wrong. It is because the tax policy has not worked they way it was intended, too big a tax burden is now placed on middle income households. Everyone should send a message to their MP that the changes are supported.

I thought the Canadian Credit Union Association could have stepped up and been a more active voice on behalf of ordinary Canadians. Unfortunately, it more likely sees itself as a voice for credit unions, not their members.

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This blog is an attempt to provoke and engage credit union directors, and members. I have been a credit union supporter for several years and I am keen to challenge some of the conventional thinking that rationalizes further consolidation. I think we have been lulled into a stupor and we fail to appreciate just what important community 'treasures' we have. SUBSCRIBE: options are at the end of every post!